Brazil Interest Rate

The Central Bank of Brazil raised its Selic rate by 25 bps to 10.75% in its September 2024 meeting, as expected. The move aligns with the goal of converging inflation toward the target while smoothing economic fluctuations, considering the resilient economy, labor market pressures, positive output gap, and rising inflation projections. Domestically, economic activity and labor market indicators have been stronger than expected, prompting a reassessment. Inflation, as measured by IPCA and underlying measures, remains above target. Inflation expectations for 2024 and 2025 are around 4.4% and 4.0%, respectively, while the projection for early 2026 stands at 3.5%. Policymakers mentioned future interest rate adjustments will depend on inflation dynamics, projections, expectations, and the balance of risks.